Freight rates to fall further in 2024
Falling freight rates will pose a challenge to shipping companies throughout 2024, according to the latest research from Drewry.
Rates began falling in 2023 thanks to increasing capacity, changing consumer behaviour and change in monetary policy, says the analyst in its ‘Financial Health Check’ for 2024.
Drewry expects overcapacity to continue to dominate companies’ fortunes, despite a rise in freight rates owing to disruption of trade through the Red Sea and Suez.
The analysis ranks each company’s risk profile using the parameters of balance sheet strength, income growth, diversification, transparency and management/control.
In its latest yearly addition, the Drewry Maritime Financial Research team has extended the scope of its analysis to include both liquidity and leverage estimates for the next three years.
The research is based on a sample of carriers, namely AP Moller Maersk, Hapag-Lloyd, Samudera Shipping Line, SITC International Holdings, Wan Hai Lines, Orient Overseas (International), Yang Ming Marine Transport Corp, ZIM Integrated Shipping Services, Evergreen Marine Corp Taiwan, COSCO Shipping Holdings Co, HMM Co and Ocean Network Express.
Key findings from this year’s analysis include:
- Despite the Red Sea crisis buoying up freight rates, oversupply will pull freight rates below breakeven.
- Throughout the year new vessels joining the global fleet will worsen the existing supply-demand imbalance and lead to a further slump in freight rates.
- Container shipping companies’ operating cash flow is expected to decline significantly in 2024 and 2025 amidst weaker freight rates.
- The vertical integration momentum of container shipping companies’ is slowing down as companies focus on conserving cash for the downturn ahead.
Related Articles
OPERATIONS
OPERATIONS
OPERATIONS